MANAGEMENT
SUCCESSION PLANNING
INTRODUCTION
Succession planning1 is a strategic necessity frequently overlooked in the press of the competitive market place. There is no immediate return on investment and no immediate change in the bottom line when succession planning is initiated and implemented. And, the idea of being replaced is not the most pleasant of fantasies managers and employees relish having, much less being involved in the decisions and choices regarding one’s successor. In other words, there are reasons for this type of planning being ignored or given short shrift.
And, yet, the absence of succession planning seriously affects the bottom line and the growth of the company, and, paradoxically enough, impacts the performance of incumbent managers.
The design of a succession planning program is intended to ensure that there will be the right people in the right places at the right time. Some firms consider succession planning only for their senior managers, whereas others estimate that their entire work flow process has to be protected from the appearance of gaping holes that cannot be readily filled. The breadth of succession planning is a function of what positions and tasks are considered critical (and to what degree) to the operations of the corporation.2
More specifically, the goals of succession planning include the following:
(1). That incumbents have the requisite skill sets and ability to carry the organization forward into the future;
(2). That the skills, ability and experience needed to carry the organization forward are recognized and formalized (e.g., into training programs);
(3). That there is an available pool of candidates from which to draw to serve as successors for key positions, so that neither the sudden nor expected absence of an incumbent (through retirement, death, disability, termination, etc.) is traumatic for the corporation;
(4). That exceptional and high potential managers are identified and their progress through the firm is sculpted, mentored and monitored;
(5). That there are career ladders for incumbents, the scripting of which will enhance loyalty to and identification with the organization;
(6). That staff will be able to readily transfer their loyalty to the successors.
Succession planning assumes both a short and long term perspective. Not only is it an antidote to the sudden absence (through death, disability, termination of an employee, resignation by an employee, etc.) of a key incumbent, but it also opens up the doors for managers who will be needed in the future. It guards against the situation in which an incumbent whose knowledge cannot be easily or readily duplicated might hold the department or company over the proverbial barrel. It enables firms to consider how diversity might be entertained and promoted in the management ranks. Politics and empire-building are minimized in an effective succession planning program, allowing talent and ability to take center stage. Succession planning reduces the number of talented and loyal people who leave the organization out of disappointment that they are not promoted.
Succession planning, then, is the embodiment of the motto often quoted though honored in the breach -- that a firm’s major resource is its human resource.
STRATEGIC NEEDS
The beginning phase of a succession plan is the documenting of what a firm will need in the future in the way of ability, skill set, learning potential and experience. This step is a direct outgrowth of the firm’s strategic planning process.
Thus, for example, if the “virtual corporation” is in the looking-glass of the firm of the future, then the CEO will have to be able to manage a downsized corporation that has a broad range of strategic alliances with whom he/she has negotiated contracts. The management team might be “hands-on” monitors of these alliances rather than coaches of an internal team of employees. The skills required might be primarily financial and negotiating rather than team-building. Similarly, if the growth of the firm is presumed to travel on the acquisition route, then the CEO and his/her management team will need to have extensive financial expertise as well as a talent for dealing with the personal fears and dislocations inevitably accompanying mergers. A high tech firm, in considering its future, might have to extend the succession planning process down throughout its ranks, ensuring that each incumbent and potential successor is current with new developments; and, in fact, given the speed of innovation, the company might develop a department devoted exclusively to sniffing out these new developments.
Senior staff, then, in plotting a strategic vision of the firm’s future, has to similarly chart the type of people the firm will need to lead it into the future. The senior management team needs to consider various scenarios in which the firm might find itself and select the kinds of people who are flexible enough to function in these scenarios. For example, three kinds of future business settings that any company might encounter are “dog eat dog”, “the same, but only better”, and a “completely different market place”. A “dog eat dog” setting is one in which the industry is exceptionally competitive. “The same, only better” would be a business environment similar to the present but better, more positive. A market place “completely different” suggests an industry environment that resembles current practice to a very limited extent. What management skills would be needed in any one of these scenarios? What kind of management team could function in all of these pictures?
CURRENT STATUS
OF
PERSONNEL
As an outgrowth of the strategic planning process and in consideration of current and near term needs, a succession program formally assesses the current incumbents in terms of four major factors:
(1). Technical skill and ability
(2). Personality style
(3). Ability to learn and develop
(4). The “fit” between the individual and the firm’s culture
An executive, for example, can succeed or fail in his performance in any one (or more) of these arenas. A strategic plan may require certain technical skills for the future that the executive fails to attain, thereby impairing the execution of the plan. A very well liked and productive individual (from a personality point of view) may not be able to command the loyalty of the team precisely because he/she needs to be liked; consequently, hard and unpleasant decisions may not get made. A corporate culture may temporarily (e.g., in a downsizing situation) need a certain type of individual that is otherwise not seen as the best kind of executive to have.
The assessment along these dimensions would come from:
(1). Personality tests and individual interviews from which a psychological portrait of an incumbent’s style can be derived.
(2). Anonymous ratings by superiors, peers and direct reports of an individual’s performance, i.e., a "360 survey" of how the person’s functioning is viewed in the actual work situation (e.g., leadership ability, decision making, etc.)
(3). The individual’s superiors regarding “cultural fit” and the skill sets that:
(a). Will be needed in the future,
(b). The individual currently possesses,
(c). The individual needs to acquire.
FUTURE NEEDS OF THE FIRM
Based on the assessment of the current incumbents, a pool of candidates for the various positions considered essential is developed. To repeat, the definition of “essential” depends on the firm and how it evaluates the difficulty of finding successors for the different positions.
Even were the program to be limited to senior management, a very useful assignment is to have every department and section leader within the company develop a listing of candidates that could succeed them, a rational for why they composed this particular list and supporting data for their choices. This task would surface “soft spots” in the firm that might deserve attention.
An extremely important factor to consider is the designation of “future leaders”, those individuals who are seen as having the potential to shape the company of the future, as opposed to “excellent managers” who will do fine were they designated a successor but who lack the “magic” of the visionary. Not all management positions would necessarily require a “high potential” as successor, but clearly many do demand just this level of ability and stature. And, again, the firm has to decide the level of charisma each position requires, as well as decide on the core capabilities a “high potential” must possess.
These various systems will allow the firm to assess whether in fact the pool of available candidates for the various essential positions is adequate for its needs. Frequently, this assessment leads to management and executive searches outside the firm. Going outside the firm in order to fill personnel gaps involves not only finding, qualifying and evaluating candidates, but also integrating them into the firm in a way that is not threatening to the incumbents, that grooms them for eventual succession and that promotes the transfer of loyalty of the team to them. In situations that repeatedly require going outside the firm to develop candidate pools, a permanent “executive search group” can be established as a resource.
CAREER LADDERS
A career ladder for all managers as well as those who are in the candidate pools is based on several factors:
(1). The structure and design of the firm of the future -- namely, what positions will exist in the future, the personnel requirements of its strategy, etc.
(2). The assessment of the ability, “fit”, personality, etc., of the candidates.
(3). The candidates’ personal desires, interests, requirements, goals and ambitions.
The function of a career ladder is to plan the movement of candidates through the hierarchy. There are many reasons for structuring and formalizing this process. A ladder tests the ability of the candidate to function at the various levels. It provides the necessary experience that a candidate will need to be successful as they move on. It demonstrates to the candidate that the firm is very much interested in his or her development, professional future and wishes (thereby, raising the percentage of well regarded people who will stay with the firm). And, as will be detailed below, it helps focus training and development programs.
There will come a point in the professional careers of managers when their ability takes them only so far and a ceiling prevents further upward movement. A career development program will have been monitoring a manager’s progress jointly with the manager throughout his or her career -- giving feedback, suggesting training and development programs, evaluating progress. This backdrop not only softens the blow of being rejected for a desired promotion but can help reframe the manager’s goals and offer alternative tasks, assignments and positions for the person to consider, all in the context of the expressed desire of the firm to retain the individual. Alternately, the conjoint monitoring of a manager’s progress makes it clear to all concerned why a manager may be asked to leave the firm.
Possibly another way of looking at career ladders is that they reduce (not eliminate) the uncertainty of a manager’s future within the firm.
TRAINING
AND
DEVELOPMENT PROGRAMS
The task of structuring training and educational programs is more easily facilitated when a firm has deciphered its strategic needs both long and short term, developed candidate pools, created assessment procedures and career ladders.
There are at least four different types of training and development programs:
(1). Technical skills training
(2). Personal skill development (e.g., decision making, time
management, management skill training, etc.)
(3). Interpersonal functioning (e.g., team building, behavioral change training, etc.)
(4). Structured job experiences (e.g., international assignments, changing the scope of a job, having the manager build a department from scratch, fixing or stabilizing a failing department or organization, etc.)
Succession planning involves the appropriate tailoring of these training and development programs to the needs of the candidates in the management pool based on the information already noted.
INVOLVEMENT
OF
EMPLOYEES
One of the most serious problems a recently appointed successor faces is commanding the loyalty of employees. The former incumbent may have been so popular that transferring loyalty to the new manager might feel by employees as a betrayal. If the successor had been promoted from within the department, relinquishing former peer relationships can be very difficult. A new manager, particularly one brought in from outside, brings in new ideas and ways of conducting business, which can butt up against the resistance expressed in the well-worn and too often heard statement , “That’s not the way we have been doing things around here the years I have been here”. The former “power brokers” within a department, i.e., those who had been part of the informal advisory board to the former incumbent, can resent being displaced, and, therefore, act accordingly. And, were the successor to deal with any of these issues in a forceful or direct way in order to get the department moving, that would become proof to the staff of their worst concerns about the change in leadership.
One way of minimizing these deleterious effects of succession is to involve the staff in the planning process. For example,
(1). Having staff be included in the evaluation process (the 360º
feedback that managers receive);
(2). Informing staff well in advance of succession that it is going
to occur, when it is scheduled, where the incumbent might be headed, etc.;
(3). Involving staff in the firm’s strategic planning process (the
idea being that the clearer the staff is about the goals and action programs of the company at large and how this affects their department and job, and, the more input employees have into the strategic thinking, the more they understand and the easier it is to accept certain decisions about promotions);
(4). Being able to openly voice their concerns about succession with and among their peers.
ORGANIZATIONAL DESIGN
AND
RESTRUCTURING
In order for a firm to compete successfully in today’s market economy, it must excel in one or more of the following areas:
(1). Being so in tune to the customer that it is able to anticipate customer needs and react accordingly;
(2). Creating products and services that satisfy customer needs;
(3). Continually improving how it manufactures products for and how it provides services to customers.
Achieving this level of excellence depends on a responsive organizational structure: systems that are adaptable, roles and responsibilities that might change overnight, and people that can oversee and implement these changes.
The future “fit” between systems, roles and people is determined through an organizational audit conducted throughout an organization. Its results point to not only how systems can be improved, but details new and different roles that are required and the people to fulfill them.
OUTPLACEMENT
A fact of modern organizational life is that change may, can or will result in the need to terminate the employment of some people. The need can arise for many reasons. The person has reached his/her level of competence and presents a liability the longer he/she remains in place. The reorganization of the firm may entail bringing in new people with new skill sets to replace current incumbents. A frequent effect of mergers is the elimination of people with duplicate sets of skills.
The personnel whose employment will be ended have served the firm faithfully and loyally. Helping them to find new positions elsewhere is only fair. It also is good business -- how a firm treats its employees who are asked to leave will impress the employee staff for either good or ill.
Consequently, the development of an outplacement program is part of Succession Planning. Some of the elements of outplacement include testing, personal and marital counseling and support, secretarial and office support.
MANAGEMENT
AND
MONITORING
OF THE
SUCCESSION PROGRAM
To achieve its goals, the succession planning process requires:
- The full unqualified support of senior management
- A recording system that allows the firm to easily track and monitor progress
- A staff mandated to conduct the entire process
- A mentor assigned to each candidate
(1). As noted in the Introduction, succession planning is not foremost in the minds of most senior managers until impending disaster casts a shadow over the fortunes of the firm. Consequently, the implementation of the process is very much a function of the continuous endorsement of farsighted senior managers. Only they have the credibility to ensure that the program remains viable and useful.
(2). And, the viability and usefulness of the program depends to a large extent on what it can yield in the way of information when and as needed. At the least, succession planning must be able to readily answer such questions as:
(a). Who would want what position
(b). Who has what skill set and necessary experience and profile
(c). What does each critical position require in the way of skill set and experience and profile
(d). Which positions have a pool of successors and to what
depth.
Another way of framing the requirement is to ask whether the program can readily address potential scenarios involving different combinations and permutations of strategic need, management position, and individual profile pertaining to the critical areas of a company.
(3). A third leg of the stool on which succession planning rests is the people assigned to conduct and monitor the process. The assignment differs from company to company. One company might have the President chairing a committee that regularly meets to review what has been done by others delegated to conduct parts of the program. Another company might have the Vice President of Human Resources conduct the entire process, with his or her staff doing everything from administering psychological tests and 360º forms to developing an in-house management development course. In general, the administration of the program should be in the hands of a clearly designated and identified team.
(4). Whatever the final design of the team administering the program, the success of the program depends on the assignment of a senior manager as mentor to each person selected for the program. It is his or her task to:
(a). Integrate all the material and information and present periodic summaries and updates to the management team
(b). Monitor the progress of the person (mentee) assigned
to him or her
(c). Discuss all information (including evaluations, test
results, etc.) with the mentee
(d). Be available to the mentee when he or she might need to talk
The process by which the mentor is selected and trained is itself a topic requiring extensive discussion. What is immediately pertinent is that:
(a). Mentors need to be trained,
(b). Mentors need to have their own “mentors’ group” for support
(c). And, such issues as confidentiality, access to immediate supervisors, etc., require guidelines that are set down anew for and by each firm and organization.
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